CLASS SAM PREFERRED STOCKHOLDERS' AGREEMENT
This Agreement (the 'Agreement') has been made
and entered into as of this 12th day of July, 1994, by
and among UAL Corporation, a Delaware corporation (the
'Company'), Joseph V. Vittoria (the 'Designated Nominee')
and Paul G. George (the 'Designated Stockholder').
WHEREAS, pursuant to the terms of and schedules
to the Agreement and Plan of Recapitalization, dated as
of March 25, 1994, by and among the Company, the Air Line
Pilots Association, International ('ALPA') and the
International Association of Machinists and Aerospace
Workers ('IAM') (as amended, the 'Recapitalization
Agreement'), including the terms of the restated
certificate of incorporation of the Company to be
effective as of the Effective Time (as defined in the
Recapitalization Agreement) (the 'Restated Certificate')
and the restated By-Laws of the Company to be effective
as of the Effective Time (the 'Restated By-Laws') (the
Recapitalization Agreement, the Restated Certificate and
the Restated By-Laws, collectively, the 'Governance
Documents'), the board of directors of the Company (the
'Board') shall, until the Termination Date (as defined in
the Restated Certificate), consist of twelve (12)
directors (subject to adjustment in certain
circumstances), one (1) of whom shall be the designated
representative (the 'Salaried/Management Director') of
the salaried and management employees of United Airlines,
Inc. ('United'), nominated and elected and/or appointed
as provided in the Governance Documents and in this
Agreement;
WHEREAS, the Governance Documents contemplate
that at the Effective Time, the Company shall issue to
the Designated Nominee and the Designated Stockholder,
and each of them shall be the registered holder of, two
shares and one share, respectively, of the Class SAM
Junior Preferred Stock, par value $.01 per share, of the
Company (the 'Class SAM Preferred Stock'), each such
share of Class SAM Preferred Stock having the relative
rights, privileges and powers as set forth in the
Restated Certificate (the holders of the Class SAM
Preferred Stock from time to time are referred to
individually herein as a 'Class SAM Preferred
Stockholder' and are collectively referred to herein as
the 'Class SAM Preferred Stockholders');
WHEREAS, the Governance Documents contemplate
that Class SAM Preferred Stock may be held only by the
Salaried/Management Employee Director and by a designated
additional shareholder, each of whom shall be a Class SAM
Preferred Stockholder;
WHEREAS, pursuant to the Class SAM Preferred
Stock Subscription Agreement dated July 12, 1994, by and
among the Company, the Designated Nominee and the
Designated Stockholder, the Company is selling to the
Designated Nominee and the Designated Stockholder, and
the Designated Nominee and the Designated Stockholder are
each purchasing from the Company, two shares and one
share, respectively, of Class SAM Preferred Stock; and
WHEREAS, the parties hereto have entered into
this Agreement in order to effectuate the terms and
intent of the Governance Documents regarding the issuance
of the Class SAM Preferred Stock.
NOW, THEREFORE, in consideration of the
foregoing premises, the mutual covenants herein contained
and other good and valuable consideration the receipt of
which is hereby acknowledged, the parties hereto hereby
agree as follows:
1. Effective Date; Term. This Agreement shall
become effective simultaneous with the Effective Time and
shall remain in effect in accordance with the terms
hereof until the earlier of (i) the tenth anniversary of
the Effective Time or such later date to which the
duration of this Agreement shall be permitted under the
General Corporation Law of the State of Delaware (the
'GCL'), as the same may hereafter from time to time be
amended, it being the express intention of the parties
hereto that this Agreement shall remain in effect
(subject to clause (ii) of this Section 1) for more than
ten (10) years if permitted under, and for as long as
permitted under, the GCL, as amended from time to time,
and (ii) the first to occur of the ALPA Termination Date
and the IAM Termination Date (each as defined in Article
FIFTH of the Restated Certificate).
2. Voting for Election of the Salaried/
Management Employee Director; Filling of Vacancies. At
all elections for the Salaried/Management Employee
Director, whether at a meeting of shareholders or
pursuant to action by written consent without a meeting,
each Class SAM Preferred Stockholder shall vote, or act
by written consent with respect to, each share of Class
SAM Preferred Stock held by such Class SAM Preferred
Stockholder in favor of the candidate for Salaried/
Management Employee Director nominated pursuant to
Section 8 of this Agreement. In the event of a vacancy
of the seat of the Salaried/Management Employee Director,
other than upon the scheduled expiration of the term on
the Board of the Salaried/Management Employee Director,
it is agreed that such vacancy shall be filled with a
candidate nominated pursuant to Section 8 of this
Agreement.
3. Grant of Proxy. Each Class SAM Preferred
Stockholder does hereby constitute and appoint each of
the other parties hereto (including the other Class SAM
Preferred Stockholder), other than the Company, as his or
her proxy to vote and/or to act by written consent with
respect to all of the shares of Class SAM Preferred Stock
owned by such Class SAM Preferred Stockholder in
accordance with the provisions of this Agreement in the
event that such Class SAM Preferred Stockholder shall
fail to do so, to the same extent and with the same
effect as such Class SAM Preferred Stockholder could do
so. The proxy hereby granted by each Class SAM Preferred
Stockholder is given in consideration of the proxy hereby
granted by each other Class SAM Preferred Stockholder and
in consideration of the other mutual covenants herein
contained, and as such the proxy granted hereby by each
Class SAM Preferred Stockholder is coupled with an
interest and shall be irrevocable for so long as such
Class SAM Preferred Stockholder remains a holder of Class
SAM Preferred Stock.
4. Restrictions on Transfer of the Class SAM
Preferred Stock. Except as provided in Sections 5 and
8(c) hereof, a Class SAM Preferred Stockholder may not
sell, transfer, pledge, assign, hypothecate or otherwise
dispose of any interest in (each, a 'Disposition') any
share of Class SAM Preferred Stock, including, without
limitation, by operation of law or otherwise. Any
purported Disposition of any share of Class SAM Preferred
Stock in violation of this Section 4 shall be null and
void and of no force and effect as to the proposed
transferee and, upon any such purported Disposition, such
share of Class SAM Preferred Stock shall be automatically
redeemed by the Company as provided in, and subject to,
Article FOURTH, Part IX, Sections 1.2 and 9 of the
Restated Certificate (the 'Automatic Redemption'). The
certificates evidencing the shares of Class SAM Preferred
Stock shall bear a legend describing the transfer and
voting restrictions and Automatic Redemption set forth in
this Agreement, as well as any other restrictions imposed
by the Restated Certificate of the Restated By-Laws.
5. Return of the Shares of Class SAM Preferred
Stock; Resignation of any Non-Nominated Director.
Notwithstanding anything contained in Section 4 of this
Agreement to the contrary, the Designated Nominee,
immediately upon (i) the expiration of his or her term of
office as the Salaried/Management Employee Director
(unless concurrently therewith such individual is re-
elected for an additional term as the Salaried/Management
Employee Director), (ii) his or her removal as the
Salaried/Management Employee Director pursuant to Article
FIFTH, Section 2.8 of the Restated Certificate or
pursuant to the penultimate sentence of this Section 5,
(iii) his or her resignation as the Salaried/Management
Employee Director, (iv) his or her ceasing to serve as
the Salaried/Management Employee Director for any reason
whatsoever, (v) his or her disqualification pursuant to
Section 8(d) of this Agreement, or (vi) his or her
failure to be re-nominated to continue to serve as the
Salaried/Management Employee Director pursuant to Section
8 of this Agreement (in any such case, the 'Terminated
Director'), shall deliver or cause to be delivered, in
exchange for the payment of the par value of each share
so delivered, the stock certificate representing such
Class SAM Preferred Stockholder's shares of Class SAM
Preferred Stock, duly endorsed for transfer, to (a) such
individual's elected or appointed successor as the
Salaried/Management Employee Director, upon such
successor executing and delivering an agreement in the
form of Exhibit B hereto, or (b) in the case where no
such successor Salaried/Management Employee Director has
been elected or appointed concurrently with such
individual's removal, resignation, disqualification
pursuant to Section 8(d) of this Agreement or failure to
be re-nominated or otherwise ceasing to serve as the
Salaried/Management Employee Director, to the Company, to
be held in escrow to be delivered to the successor of
such Terminated Director when such successor (x) is duly
elected or appointed, as the case may be, and (y)
executes and delivers an agreement in the form of Exhibit
B hereto. The Company shall immediately effect an
Automatic Redemption with respect to, or if such
Automatic Redemption is not applicable, the Terminated
Director shall sell and the Company, subject to legally
available funds therefor, shall purchase, all shares of
Class SAM Preferred Stock of any Terminated Director who
fails to comply with the transfer requirements of this
Section 5 and shall (subject to the following sentence)
transfer or re-issue such redeemed or purchased shares to
such Terminated Director's successor upon such successor
executing and delivering an agreement in the form of
Exhibit B annexed hereto. If such Terminated Director's
successor is elected or appointed and executes and
delivers an agreement in the form of Exhibit B annexed
hereto prior to such Automatic Redemption or purchase by
the Company, the Company shall issue to such successor
two shares of Class SAM Preferred Stock upon the payment
of the par value thereof. In addition, if the Designated
Nominee fails to be re-nominated as the Salaried/
Management Employee Director pursuant to Section 8 of
this Agreement, such individual shall immediately resign
from the Board and if such individual fails to so
immediately resign from the Board, each of the Class SAM
Preferred Stockholders (including the Class SAM Preferred
Stockholder who has failed to so immediately resign from
the Board) shall promptly vote (or act by written consent
with respect to) their shares of Class SAM Preferred
Stock to immediately remove such individual from the
Board, without cause. A Terminated Director who resigns
from, is removed from or otherwise ceases to be a member
of the Board and otherwise complies with the provisions
of this Section 5 shall no longer be deemed to be a party
to this Agreement.
6. Replacement Salaried/Management Employee
Director. Immediately upon the election or appointment
(as the case may be) of an individual to replace or
succeed any Terminated Director, such individual shall
execute and deliver to the Company and the remaining
parties hereto an agreement (in the form of Exhibit B
annexed hereto) agreeing to be bound by each of the terms
of this Agreement, and from and after the execution and
delivery of such agreement, such individual shall be
deemed to be a party to this Agreement. Should any
individual who has been elected or appointed, as the case
may be, as the Salaried/Management Employee Director fail
either (i) to become a Class SAM Preferred Stockholder or
(ii) to execute and deliver an agreement in the form of
Exhibit B annexed hereto, each of the Class SAM Preferred
Stockholders shall vote (or act by written consent with
respect to) their shares of Class SAM Preferred Stock to
remove such person as the Salaried/Management Employee
Director, without cause.
7. Mandatory Extensions. Not later than two
years prior to the date, if any, on which this Agreement
would otherwise expire pursuant to clause (i) of Section
1 of this Agreement, the Company and the Class SAM
Preferred Stockholders shall execute and deliver to each
other an extension of this Agreement for a period of time
equal to the longest period then permitted by law, but in
no event beyond the first to occur of the ALPA
Termination Date and the IAM Termination Date. Should
any Class SAM Preferred Stockholder fail to execute and
deliver the extension of this Agreement required by this
Section 7 (a 'Non-Extending Stockholder'), each Class SAM
Preferred Stockholder, including each Non-Extending
Stockholder, shall vote (or act by written consent with
respect to) their shares of Class SAM Preferred Stock to
remove such Non-Extending Stockholder from the Board,
without cause, if such Non-Extending Stockholder is the
Salaried/Management Employee Director.
8. Nomination and Election of the
Salaried/Management Employee Director. (a) The
Designated Nominee named herein shall be the initial
Designated Nominee hereunder, and the Designated
Stockholder named herein shall be the initial Designated
Stockholder hereunder, each of whom shall serve in such
capacity until a replacement is named pursuant to this
Section 8.
(b) The Designated Nominee shall be the
initial candidate for election as the Salaried/Management
Employee Director and shall serve in such capacity until
another candidate is elected or appointed to be the
replacement Designated Nominee (the 'Replacement
Designated Nominee') in accordance with the procedures
identified in Exhibit A hereto. Upon such election or
appointment, the Designated Nominee shall transfer the
share of Class SAM Preferred Stock held by him or her to
the Replacement Designated Nominee for a purchase price
equal to the par value thereof, and the Replacement
Designated Nominee shall purchase such share and shall
execute and deliver a copy of an agreement in the form of
Exhibit B hereto, as provided elsewhere herein.
Thereupon, the Replacement Designated Nominee shall
become the 'Designated Nominee' hereunder for all
purposes, and the Designated Nominee and the Designated
Stockholder, as Class SAM Preferred Stockholders, shall
vote to elect such Designated Nominee as the Salaried/
Management Employee Director, as provided elsewhere
herein. In the case of a vacancy of the Board seat for
the Salaried/Management Employee Director, a candidate
for election shall be identified in accordance with the
procedures in Exhibit A as the Salaried/Management
Employee Director, and such person shall become the
Replacement Designated Nominee hereunder.
(c) The Designated Stockholder shall serve in
such capacity until another candidate is nominated to be
the replacement Designated Stockholder (the 'Replacement
Designated Stockholder') in accordance with the procedure
identified in Exhibit A hereto. Upon such nomination,
the Designated Stockholder shall transfer the share of
Class SAM Preferred Stock held by him or her to the
Replacement Designated Stockholder for a purchase price
equal to the par value thereof, and the Replacement
Designated Stockholder shall purchase such share and
shall execute and deliver a copy of an agreement in the
form of Exhibit B hereto, as provided elsewhere herein.
Thereupon, the Replacement Designated Stockholder shall
become the 'Designated Stockholder' hereunder for all
purposes. The Designated Stockholder agrees to sell and
the Company agrees to purchase (which may be by
redemption) all shares of Class SAM Preferred Stock of
any Designated Stockholder who fails to comply with the
transfer requirements of this Section 8(c) by paying the
par value of each share being purchased to such
Designated Stockholder and shall (subject to the
following sentence) transfer or re-issue such purchased
shares to the Replacement Designated Stockholder upon
such Replacement Designated Stockholder executing and
delivering an agreement in the form of Exhibit B annexed
hereto. If such Replacement Designated Stockholder
executes and delivers an agreement in the form of Exhibit
B annexed hereto prior to such purchase by the Company,
the Company shall issue to such successor one share of
Class SAM Preferred Stock upon the payment of the par
value thereof.
(d) Any person who is otherwise not
disqualified pursuant to the terms of this Agreement
shall be qualified to become the Designated Nominee or
the Designated Stockholder hereunder. Notwithstanding
anything in the foregoing portion of this paragraph (d)
to the contrary, any person who, as a Class SAM Preferred
Stockholder, has failed to vote the share or shares of
Class SAM Preferred Stock for the candidate for election
as the Salaried/Management Employee Director nominated by
the System Roundtable shall be disqualified hereunder
from serving as either a Designated Nominee or a
Designated Stockholder thereafter unless such
disqualification is thereafter lifted by the System
Roundtable.
(e) The System Roundtable shall communicate
its actions by written notice (or communicated orally and
confirmed in writing), given in person, sent by facsimile
transmission or other electronic medium or sent by
overnight express service to the addresses that the
parties hereto shall provide in writing to the System
Roundtable from time to time.
(f) The System Roundtable is the intended
third-party beneficiary of this Agreement, and the
parties hereto agree for the benefit of the System
Roundtable, however constituted, that they shall perform
their respective agreements hereunder. The System
Roundtable and the members thereof shall not be liable to
any person on account of any action it or they may take
pursuant to the terms of this Agreement.
9. Waiver of Claims. Except as provided in
Section 13, each Class SAM Preferred Stockholder hereby
waives any and all claims, whether for damages or
otherwise, which such individual may otherwise have
against any person or entity in connection with such
person or entity performing the terms of, or otherwise
acting in accordance with, this Agreement.
10. Binding Effect. The provisions of this
Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
assigns (and, in the case of a deceased Class SAM
Preferred Stockholder, such individual's estate and
heirs), provided that no party may assign, delegate or
otherwise transfer any of its rights or obligations under
this Agreement except as provided herein.
11. Governing Law. This Agreement shall be
construed in accordance with and governed by the laws of
the State of Delaware, without regard to the conflicts of
laws principles thereof.
12. Counterparts. This Agreement may be
signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signature
thereto and hereto were upon the same instrument.
13. Specific Performance. The parties hereto
agree that if any of the provisions of this Agreement
were not performed in accordance with their specific
terms or were otherwise breached, irreparable damage
would occur, no adequate remedy of law would exist and
damages would be difficult to determine, and that the
parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or
equity.
14. Amendments. This Agreement may not be
amended or modified unless such amendment or modification
(i) is approved in writing by the Company and each then
existing Class SAM Preferred Stockholder and (ii) is
consented to by the Independent Directors and the Outside
Public Directors (each as defined in the Restated
Certificate).
15. Entire Agreement. This Agreement,
together with the Class SAM Preferred Stock Subscription
Agreement, constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof
and, except as otherwise contemplated hereby, supersedes
all other prior agreements and understandings, both
written and oral, between the parties hereto with respect
to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above
written.
UAL CORPORATION
By:/s/ Joseph R. O'Gorman
________________________
Name: Joseph R. O'Gorman
Title: Executive Vice President
/s/ Joseph V. Vittoria
____________________________
Joseph V. Vittoria
Designated Nominee
/s/ Paul G. George
____________________________
Paul G. George
Designated Stockholder
EXHIBIT A TO THE
CLASS SAM PREFERRED
STOCKHOLDERS' AGREEMENT
SALARIED/MANAGEMENT EMPLOYEES
DIRECTOR AND DESIGNATED STOCKHOLDER
SELECTION PROCESS
* The Salaried/Management Employees Director shall be
nominated by the System Roundtable.
* The Designated Stockholder shall be the senior
executive of United who has primary responsibility
for human resources (the 'Executive') unless and
until the Company has purchased (which may be by
redemption) all shares of Class SAM Preferred Stock
of any Designated Stockholder in accordance the
fourth sentence of Section 8(c) of the Agreement.
In the event of such purchase, the Replacement
Designated Stockholder shall be as identified by the
System Roundtable until such Executive is no longer
the senior executive of United who has primary
responsibility for human resources.
* The System Roundtable shall establish a committee
(the 'Selection Committee') of four employees to
select the nominee for Salaried/Management Employees
Director and the Replacement Designated Stockholder
in accordance with the immediately preceding
paragraph, which selection must be approved by a
majority of the System Roundtable.
* The Selection Committee or the System Roundtable may
engage executive search firms and other consultants
to assist in the selection of a nominee and may
consult with legal counsel and the Company's
management in making the selections.
EXHIBIT B TO THE
CLASS SAM PREFERRED
STOCKHOLDERS' AGREEMENT
In consideration of the receipt of the
[one/two] share[s] of Class SAM Preferred Stock of the
Company and other good and valuable consideration the
receipt of which is hereby acknowledged, the undersigned
hereby agrees to be bound by and perform each of the
terms of the Class SAM Preferred Stockholders' Agreement,
made as of the 12th day of July, 1994, by and among UAL
Corporation and certain individuals who were named to
serve as the initial Designated Nominee and the initial
Designated Stockholder (the 'Agreement'), as if the
undersigned were the original [Designated Stockholder/
Designated Nominee] under the Agreement. Capitalized
terms not defined herein shall have the meanings ascribed
to them in the Agreement and Plan of Recapitalization,
dated as of March 25, 1994, as amended from time to time,
by and among the Company, the ALPA and the IAM.
IN WITNESS WHEREOF, the undersigned has
executed this Agreement to be bound by the Class SAM
Preferred Stockholders' Agreement as of the date set
forth below.
Dated: ___________________________
Class SAM Preferred Stockholders' Agreement - UAL Corp., Joseph V. Vittoria and Paul G. George
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